Spain suffered its second biggest corporate crash on Tuesday when real estate giant Reyal Urbis filed for insolvency as banks lost patience with a debt-strapped company that never recovered from the country's burst housing bubble.

Reyal Urbis filed for insolvency after failing to renegotiate €3.6bn (£3.1bn) of debt with creditors that are increasingly impatient with the numerous real estate companies that have fallen foul of the property implosion.

With house prices still falling four years after the bubble burst and the overhang of unsold new properties estimated at up to 1Mm houses and apartments, the future looked bleak not just for Reyal Urbis but other developers weighed down with debt.

Reyal Urbis valued its property portfolio at €4.2bn in June 2012, but its sliding value means debt is now thought to be larger than assets.

A court must now decide whether to liquidate the company – a process that make take several years.

"Many loans were refinanced one or two years ago, in the hope that things would get better, but it has not been the case and there is now more realism about the situation," one source at a creditor bank said. "Why would you extend a new loan today?"